The Quick Read: It depends on the lien type and the appraised value, because the limit is a formula: the lender’s combined loan-to-value cap times the appraised value, minus your first mortgage and any solar balance that counts as a true lien, with an unpermitted ADU usually adding little or nothing to value.
- Bank statements prove income. They do not raise the cap or change the math.
- On an investment-property line, the network ceiling is 70% CLTV, with a 700 credit minimum and a maximum line of $500,000.
- On a primary residence or second home, the ceiling reaches 90% CLTV only at a 720-or-better credit profile, and the maximum line depends on the property type and the CLTV band, as the table shows.
- A solar claim on the equipment alone usually costs you title work, not equity. A solar deed of trust or a PACE assessment costs you equity dollar for dollar.
- An unpermitted ADU is a valuation problem, not a lien. Expect the appraiser to leave it out.
The Formula Behind Every Answer
The borrowing limit is the lender’s CLTV cap multiplied by the appraised value, minus everything already recorded against the home. CLTV, combined loan-to-value, is all the loans on the property added together and divided by its value. That includes the new line.
How large a line the equity supports.
An equity line is sized by combined loan-to-value, occupancy, and credit — not by rental coverage. Switch the occupancy or the credit band and the ceiling moves with it.
Investment-property lines require a 700 minimum credit score; second-home lines start at a 640 minimum and primary-residence lines at 600, and the combined-LTV ceiling steps down as the credit band drops on primary-residence and second-home lines and holds on investment-property lines; the line cap steps down on primary-residence lines and holds at every tier on investment-property and second-home lines.
A debt-to-income ratio above 45% requires 680+ credit. Profiles under 640 are limited to single-family homes. At least 75% of the approved line is drawn at closing. Ceilings, floors, and caps update from Lendmire’s centralized guideline source.
Line estimate
Illustrative estimate only — not a quote, Loan Estimate, approval, or commitment to lend. The rate is an editable assumption; equity-line pricing is variable through both the draw and repayment periods and never converts to fixed. Occupancy and credit drive the ceiling together: an investment property tops out at 70% combined LTV (minimum credit 700, line cap $500,000); a second home tops out at 90% combined LTV (minimum credit 640, line cap $500,000), with the ceiling stepping down as the credit band drops (the cap holds at every tier); a primary residence tops out at 90% combined LTV (minimum credit 600), and its $750,000 maximum line is available only at 75% combined LTV or below with a 700-or-better credit profile (720 on the longer-runway program) and a full appraisal. Lines above $500,000 require a full appraisal. Credit, debt-to-income, property type, and full underwriting review all affect the final line.
Each piece of the formula can shrink for a different reason:
1. The cap depends on occupancy and credit profile.
2. The value depends on what the appraiser or automated valuation counts as legal living space.
3. The existing debt depends on your first mortgage and any solar obligation that sits on title as a real lien.
Self-employed borrowers often assume the income documentation is the hard part. It is just the first gate. The collateral and title tests come after it.
What a Bank Statement HELOC Changes (and What It Doesn’t)
A bank statement HELOC changes how income is proven and nothing else. The lender reviews your file on documented deposits instead of tax returns, under the applicable program and subject to lender guidelines. Credit, equity, property type, and title are still underwritten in full.
Trade press describes the usual non-QM setup this way. The borrower supplies 12 to 24 months of statements, the lender applies an expense factor (the article uses 50% as an example), and the lender still has to confirm the borrower can repay. Each program sets its own factor. Transfers, loan proceeds, and one-time deposits are typically stripped out.
Two program rules matter here:
- Debt-to-income (DTI). The network’s maximum is 50%, and 45% for credit profiles from 600 to 679. The line is qualified on the interest-only payment calculated on the maximum draw.
- Credit. The program floor is 600, but an investment-property line needs 700.
So the statements get you through the income door. They do nothing for a thin appraisal or a lien on title.
Which Ceiling Applies to Your Property?
The ceiling depends on how you use the property, and the three tiers are very different. When you request a quote, use the tier that matches your occupancy rather than the highest figure listed.
| Occupancy | Top CLTV | Credit needed | Max line |
|---|---|---|---|
| Investment property | 70% | 700 minimum | $500,000 |
| Second home | 90% | 720+ for 90% | $500,000 |
| Primary residence | 90% | 720+ for 90% | $750,000 (75% CLTV above $500,000) |
Primary-residence lines above $500,000 are available only on a primary residence, cap at 75% CLTV, and need at least a 700 credit profile (720 on the longer-draw structure). They also require a full appraisal.
Lenders in the broader market advertise their own CLTV figures for bank statement lines. That is a market figure, not this network. On this network, an investment-property line stops at 70% CLTV.
Two more limits matter for investors:
- Title. The borrower must hold title as an individual or in a revocable living trust. An LLC cannot hold title on this line. A property already deeded to an LLC needs a vesting change, or a DSCR cash-out refinance instead, subject to lender program eligibility.
- Footprint. The line is available in Lendmire’s 16 full-service states. That is narrower than the 41-market DSCR footprint.
Solar Liens: The Type Decides Everything
Not every solar lien costs you borrowing power. The question is whether the claim is on the equipment or on the house.
Equipment-only filing (UCC-1). A loan, lease, or power purchase agreement is often secured by a UCC-1 fixture filing recorded against the property. It is a claim on the panels, not a dollar lien on your equity. A title-industry explainer notes that it shows up on the title commitment as a closing requirement. There are three usual fixes:
1. Pay off the system and file a termination.
2. Transfer the lease or agreement with the provider’s consent.
3. Subordinate the filing to the new lien.
A signed promise is not a cleared lien. Confirm the release or subordination is actually recorded.
Solar deed of trust. Some solar loans are recorded as a second mortgage on the house. That balance is a true lien, so it counts in the CLTV and reduces the line one for one.
PACE assessment. PACE (Property Assessed Clean Energy) financing is repaid through the property tax bill. Under the CFPB’s final rule on residential PACE, PACE obligations are secured by a real-property lien. Legal commentary on the rule notes that PACE liens typically rank ahead of mortgage liens under state law, like property-tax liens, including earlier mortgages. That is why subordination is rare, and a UCC-3 termination does not clear it. The balance normally has to be paid off or the lender has to consent.
| Solar structure | On title | Cuts equity? | What to do |
|---|---|---|---|
| Owned, paid in full | Nothing | No | Nothing |
| Lease or PPA | UCC-1 filing | Usually no | Provider consent or subordination |
| Solar loan, equipment filing | UCC-1 filing | Usually no | Subordinate or pay off |
| Solar deed of trust | Recorded lien | Yes | Counts in CLTV |
| PACE | Tax-bill assessment | Yes | Pay off or get consent |
The payment is a separate issue from the lien. A solar loan payment is a monthly debt, and it generally shows up in the debt ratio. If the payment comes out of your business account, it also changes the deposit picture the statements show. Ask the underwriter how the program treats it before you submit.
The Unpermitted ADU Is a Valuation Problem
An unpermitted ADU does not create a lien. It shrinks the value the line is sized against. That is a different kind of damage, and it hits at the appraisal.
Appraisers have to report whether improvements are legal. If the appraised value drops, the line drops with it at the same CLTV cap.
The Urban Institute points out that cash-out refinances and home equity lines consider only a property’s current value. A not-yet-legal ADU adds nothing to collateral that is measured today.
Three details matter in practice:
- The owner’s number and the appraiser’s number differ. A seller’s or owner’s value with the ADU may not survive the appraisal.
- Automated valuations can miss it. Lines at or below $500,000 ordinarily run an automated valuation with no traditional appraisal. A higher CLTV may require a secondary valuation, and you can always request a full appraisal. A full appraisal is mandatory on lines above $500,000. A miss at the automated stage can surface later, so don’t count on it.
- Permit status can be unclear. Shared utilities do not prove a unit is unpermitted. Pull the city permit record before you assume.
Legal nonconforming is a separate category from illegal. A grandfathered unit may be treated differently, but whether a given program accepts it is a program-specific question.
Four Scenarios, Same House
Here is the formula in motion. These are modeled assumptions, not market data, and every figure is a share of the owner’s expected value. Assume an investment-property line at the 70% CLTV ceiling, and a first mortgage equal to 45% of value.
| Scenario | Value counted | Max total debt | Room for the line |
|---|---|---|---|
| No solar, no ADU issue | 100 | 70 | 25 |
| Solar deed of trust (5 of value) | 100 | 70 | 20 |
| PACE balance (5 of value) | 100 | 70 | 20 |
| ADU (10 of value) dropped, plus the same 5 solar lien | 90 | 63 | 13 |
A lease or equipment-only filing looks like the first row, because the balance does not count against CLTV. It still needs a recorded fix before closing.
The ADU row shows why it hurts most. It shrinks the value base and the cap together, so it takes more than its own share. The room falls from 25 to 13 per 100 of expected value. The solar lien alone took 5 of that.
Lender overlays, credit tier, and line-size limits can tighten the result further. The $500,000 line limit applies on an investment property whatever the formula says.
Having Both: Fix in This Order
When a property has a solar claim and an unpermitted ADU, the order of repairs matters.
1. Pull the title report first. Find out exactly what is recorded, including any state-level UCC-1 that may not appear in a county search. A state-level filing and a county fixture filing are separate filings, so a late surprise is possible.
2. Classify the solar item. Equipment-only filing, deed of trust, or PACE. Call the provider the same day.
3. Pull the ADU permit record. Learn whether it is unpermitted, unclear, or legal nonconforming.
4. Decide whether to legalize before you borrow. Legalizing first is the cleanest fix, because it gives the appraiser something legal to count. A line sized on a legalized unit is a better line than one sized on a hoped-for value.
5. Clear the solar item with recorded proof. Get the termination, subordination, or consent in writing and confirm it is recorded.
6. Then apply. Gather 12 to 24 months of statements, the solar contract and any fixture addendum, the permit history, and a payoff or subordination letter from the provider.
If the ADU is a rental, remember that the line itself is underwritten on documented income and collateral. The rent from an unpermitted unit also generally will not be counted if you later move to a DSCR loan, because the appraiser’s rent schedule is built on legal units.
When a DSCR Cash-Out Makes More Sense
Investors who own rentals should compare the line against a DSCR cash-out refinance, a different tool with different tests.
A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Cash-out on a standard rental generally tops out around 75% LTV, and about 6 months of seasoning is the common expectation. Properties held in an LLC may be eligible, depending on program guidelines.
DSCR compares rent to the full payment (principal, interest, taxes, insurance) and nothing else. Clearing 1.00 is not the same as positive cash flow, because repairs, vacancy, management, and utilities sit outside the calculation.
The decision usually runs like this:
- Property is deeded to an LLC. The line cannot hold title there, so a DSCR cash-out is the cleaner path.
- You need a larger amount. The investment-property line stops at 70% CLTV and $500,000.
- You want income proof that comes from the property. A DSCR loan uses the rent. The line uses your deposits.
- You want a smaller draw you can reuse. The line fits that better.
The complete DSCR loans guide covers the full program picture.
Key Terms Defined
CLTV (combined loan-to-value): All loans on the property, including the new line, divided by its appraised value.
UCC-1: A filing that records a creditor’s claim on equipment, such as solar panels, rather than on the house itself.
UCC-3: The filing that terminates or amends a UCC-1 once the debt is paid or the claim is released.
Fixture filing: A UCC-1 recorded in the county land records against the property’s legal description, so it shows up in a title search.
PACE: A financing program repaid through the property tax bill, which typically gives the lender a lien that ranks ahead of mortgages.
ADU (accessory dwelling unit): A separate living unit on the same lot, such as a garage conversion or backyard cottage.
Frequently Asked Questions
Does a solar lease or equipment filing reduce how much I can borrow?
Usually not. A UCC-1 claims the panels, not your equity, so it generally stays out of the CLTV calculation. It does need to be dealt with before closing, through subordination, a lease transfer with consent, or a payoff and termination. Expect the cost to be paperwork and coordination, and ask the underwriter how the program treats it.
Does PACE block a HELOC?
It does not automatically block one, but it is the hardest solar item to work around. PACE is a real-property assessment that typically ranks ahead of mortgages, and subordination is rare. In most cases the balance has to be paid off or the PACE administrator has to consent. If it stays, it reduces the room under your CLTV cap.
Will the appraiser count my unpermitted ADU?
Expect little or nothing. Appraisers report whether improvements are legal, and unpermitted space is usually valued at or near zero. An automated valuation may miss the unit entirely, but you should not rely on that. If you want the ADU counted, legalize it first and ask for a full appraisal.
Can I pay off solar with the line itself?
Often yes, if the structure allows it and the balance fits inside your available room. It then becomes part of the CLTV math, since the new line would carry that debt. A payoff can also remove a title requirement, so a borrower may choose to settle the solar claim at closing. Confirm the program’s handling before you plan around it.
Can an LLC borrow on this line?
No. Title must be held by the individual borrower or a revocable living trust. LLCs, corporations, partnerships, and irrevocable, blind, or land trusts cannot hold title. If your rental is in an LLC, a DSCR cash-out is the usual alternative, subject to lender program eligibility.
Next Step
If you are considering a home equity line and want to see how the numbers work, Lendmire can help you compare HELOC options based on the property, the equity available, credit profile, combined leverage, and your goals. For the step-by-step documents and sequencing, Lendmire’s piece How to Qualify for a Bank Statement HELOC With a Solar Lien or an Unpermitted ADU picks up where this article stops. You can reach the team at 828-256-2183 or request a quote. Every figure here is subject to lender guidelines and full file review, and nothing here is a commitment to lend.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and real estate investors in its 16 full-service states. Home equity lines of credit are arranged through wholesale lending channels; Lendmire brokers the line and the lender underwrites each application under its occupancy-based guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Scotsman Guide, “Rev Up the Engine for Non-QM Lending”
2. Skyline Title Support, solar panel UCC liens and fixture filings
3. CFPB final rule on residential PACE financing (PDF)
4. Legal commentary on the rule
5. Urban Institute, “Allow and Finance ADUs”
This article is part of Lendmire’s bank statement HELOC program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get a Bank Statement HELOC on a Fourplex With Five Financed Rentals? · Can You Get a Bank Statement HELOC Without Changing the Deed? · Can You Get a Bank Statement HELOC Without Their Spouse on the Loan?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.